The 8 Stages of Selling a Medical Practice to the Hospital

By Dennis Hursh | Physician Contracts

Mar 15
8 steps to selling

I have represented physicians in dozens of sales of medical practices to hospitals, and I have noticed that these deals tend to follow the same path each time:

  1. Everybody loves each other. The physicians feel that this will be a great match. The hospital understands what they want and is extremely willing to do whatever it takes to make the deal happen. Warm and fuzzy best describes the atmosphere.
  2. The employment agreements and asset sale agreement  are produced. Perhaps because of an oversight, several of the promised concessions somehow didn’t make it into the agreements. The physicians assure me that the lawyers just didn’t get the deal right. We only need to point out the problems, and they will be fixed. All is good.
  3. I give my responses to the agreements as produced. The physicians feel I went a little overboard, since I seem to be questioning why the pieces of paper don’t match the discussion. A vague sense that the lawyers might screw up this deal begins to pervade the discussions.
  4. The hospital responds to my requested changes. It turns out the hospital “never” commits to doing some of the things the docs felt were agreed to in their discussions. The physicians begin to question whether they should be going forward with this deal.
  5. Negotiations continue. The hospital begins to perform its due diligence. The physicians feel that any examination of their practice is a breach of trust, and that the questions being asked are invasive. The doctors begin to develop a feeling that the “corporate folks” don’t understand the practice of medicine, and that the hospital is only interested in them for the value of their services. A definite sense of unease permeates discussions with the physicians.
  6. The hospital makes its final offer. It really isn’t what the docs understood the deal to be, and they feel  the process is driving them into a bad decision. A time of self-reflection for the physicians ensues.
  7. Some relatively minor issue (e.g., a document is requested that was previously supplied) puts the physicians completely over the edge. The deal is off!
  8. I end up soothing ruffled feathers, and the physicians decide that, all things considered, it isn’t a horrible deal.The documents are signed. The physicians are happy that the ordeal has ended.

I really wish I could make things better during this process. My hope is that physicians reading this will recognize that they are going through natural stages, and will have a little less angst as we work through this process together.

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About the Author

I am a healthcare attorney with over 34 years of experience, focusing on physician contracts, regulatory compliance and sales of medical practices.

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